Compensation and
Benefits for American
Expatriates
Sarah Brady
Deanine Estes
Shannon Johnson
Kate Robertson
Questions for our
Expatriates and Experts
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Ms. Kate Robertson - Human
Capital Advisory Services Division Mercer
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Ms. Shannon Johnson – Colgate
Palmolive
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Ms. Deanine Estes - Proctor &
Gamble
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Ms. Sarah Brady - Chevron
CAUTION…
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What is an American expatriate?
There is not “one correct
method” to create a
compensation package.
There are more factors above
and over what we have
discussed…we choose the main
issues.
Failed Assignments
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Many expatriate assignments
fail each year ~30%
Family dissatisfaction
 Cultural issues
 Feeling of isolation from home
company
 Financial dissatisfaction
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High costs associated with
failures
Overview
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Monetary Factors
of Expatriate
Compensation
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Non-monetary
Factors
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Political
Implications
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Current Events
Monetary Factors:
Base Salary
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Base Salary
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Comparable to home country
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Serves as a reference point for establishing
additional benefits
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Greatest point of flexibility
Choose method
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Home country-based
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Host country-based
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Headquarter-based
“Base salary is the greatest point of flexibility. Companies
set a maximum that’s not a maximum, to be honest”
-David Kohtynski, Nike
Monetary Factors:
Assignment Premium
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Incentive: persuade
acceptance of
international
assignments
Environmental or
hardship premiums
Mobility premiums
Monetary Factors:
Tax Considerations
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Tax burden depends on location
of assignment
Solution: Tax Equalization
Simple and easily understood
 Benefits both employee and
employer
 Employee will not receive the tax
burden
 May be high cost to Employer
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Monetary Factors:
Payroll
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Not placed on foreign
location’s payroll
May accrue Social
Security benefits
Consider exchange
rates and inflation
Non-monetary Factors:
Family Considerations
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Assimilation programs
Support programs
 Call centers
 Language programs
 Cultural awareness
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Non-monetary Factors:
Medical Coverage
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27% of expatriates are
dissatisfied
Employers provide full
coverage
2 plans may be
necessary
 Supplemental plans are
necessary
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Non-Monetary Factors:
Housing
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Housing and utilities allowance
Goods and services allowance
Cost of housing differences
Expatriates discouraged from
selling their American home
American communities in
foreign lands
Non-monetary Factors:
Education
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Match American standards
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Tuition reimbursement
Non-Monetary Factors:
Days Off
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Travel Expenses
 Children
 Employees
Rest and Recreation
days
Non-Monetary Factors:
Repatriation
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Employees forfeit “special”
compensation
Re-assimilation problems
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Difficult to collaborate
Resentment
Solutions
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Re-assimilation courses offered
Promotion offered
Career development programs
Capitalize on foreign experiences
Political Implications: Attack
on September 11th
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Fear of domestic and international air travel
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Safety became top priority
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Travel restrictions to certain regions
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Extra approvals and precautionary measures
“After September 11th some companies curtailed travel
and cautioned employees but there wasn’t any huge
exodus.”
-Wall Street Journal, 2002
Political Implications:
War on Iraq

Large impact on expatriates in
Middle-Eastern region
Fear for lives
 Opinionated with respect to
business implications
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Current Economic
Conditions
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Companies
are
decreasing
number of
expatriates
Localization is
a more cost
efficient
option
Conclusion
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Many factors in sending expatriates abroad
Every company compensates differently
TOP PRIORITY: MAKE THE EXPATRIATE
HAPPY!!
““It is important to get an understanding of how your
employees perceive the international human resources
policy you’ve put in place and why you have relocated
them. It is necessary to make sure they feel good about
the programs that are underway to facilitate their
international assignment. You want to know you are
meeting their needs.”
- John Fadel, Deloitte & Touche
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QUESTIONS FOR YOU…
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If you were an expatriate, what would
you perceive as being the most
important benefits? Why?
Would you let the current social and
political events affect your decision to go
abroad? If not, what extra
compensation would you deem
necessary?
Would you fear coming back to the U.S.
after working abroad? What types of
repatriation programs would you like to
see implemented within your company?
QUESTIONS FOR US…?
References
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Bibliography
Anonymous. “Worker safety is top priority”. Business Insurance, Chicago, (Mar 24,
2003).
Anonymous. “Shell Oil, CIGNA winners of IFEBP awards”. Employee Benefit Plan
Review, Chicago,(Jan 1999).
Balkin, Cardy, and Gomez-Megia. Managing Human Resources III edition
Cairncross, Francis. “Survey: No Man is an Island.” The Economist, 351. May 1999.
Cummins, Chip. “Expatriate Iraqis Say Oil Fields Should Be Opened --- U.S, -Backed
Panel’s Embrace of Investment Isn’t Surprise, But It Gives Hope to Firms”. Wall Street Journal NY, (Mar 3, 2003)
Feinstein, Selwyn. “A Special News Report on People and Their Jobs in Offices, Fields
and Factories”. Wall Street Journal, (May 3, 1998)
Geber, Beverly. “The Care and Breeding of Global Managers” Training,29. July 1992.
“How U.S. Companies Are Responding --- Most Are Curtailing Travel and Cautioning
Employees, But No Exodus Is Under Way”. Wall Street Journal, NY, (Jun 3, 2002).
Howe, Kenneth. “Salary Negotiating Tips for Expat Assignments.” The Wall
Street Journal Interactive Edition. 2002.
Hunt, John. “Fewer Foreign Criticisms: Companies, it seems, have been dealing with
The complaints of disgruntled expatriates.” Financial Times. London,
July 2001.
Janush, Erwin. “Developing Expatriate Remuneration Packages.” Employee Benefits
Journal. June 2001.
Jordan, Miriam. “Your Career Matters: Have Husband, Wil Travel --- World of the Trailing Spouse Isn’t Wives-Only Anymore; ‘It’s
the Best Job I Ever Had’. Wall Street Journal, (Feb. 13, 2001).
LeClaire, Jennifer. “Managing Employees in a Global Marketplace.” L2S, Inc. May 17
2000.
Payne, Beatrix. “Luxembourg Builds Multinational Model for Pension Plans.”
Pensionsand Investments, 28 June 2000.
Peach, Robert. “Expatriates and Qualified Plans”. Benefits Quarterly. 1996.
Riki, Takeuchi.“An Examination of Crossover and Spillover Effects of Spousal and Expatriate Cross-Cultural Adjustment on
Expatriate Outcomes”,, Journal of Applied Psychology, Volume 87, Issue 4, August 2002, Pages 655-666
Slater, Jeremy. “Compensation Surveys: The Basics.”
HYPERLINK "http://www.expatica.com" March 2003.
Solomon, Charlene Marmer. “Global Operations demand that HR
rethink diversity.” Personnel Journal, 73. July 1994.
Sussman, Nan. “Repatriation transitions: psychological preparedness, cultural identity, and attributions among American
managers, International Journal of Intercultural Relations, Volume 25, Issue 2, March 2001, Pages 109-123
“Tax Planning For Expatriates.” The Tax Adviser. New York, April 2001.
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Thaler-Carter, Ruth E. (1999). “Vowing to Go Abroad.” HR Magazine, 44. November
1999.
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Compensation and Benefits for American Expatriates